Australian shares slump after ANZ misses; NZ at near 1-wk low

Reuters Staff

3 Min Read

Oct 26 (Reuters) - Australian shares slumped on Thursday, hit by a drop in Australia and New Zealand Banking Group Ltd after its annual net profit came in slightly lower than estimates, with weakness in miners also dragging on the index.

ANZ shares slipped as much as 2.4 percent after the results, the biggest daily percentage drop in nearly 11 weeks, and its lowest price in more than two weeks.

“The result adds to our conviction that ANZ is missing the margin sweet spot in Australian banking, while institutional margins and revenues remain under pressure,” Morgan Stanley said in a note.

Other “Big Four” banks followed suit, falling between 0.5 percent and 0.6 percent. The financial index posted its biggest daily drop in more than three weeks.

On Wednesday, the Australian dollar sank to its lowest since mid-July after a surprisingly subdued domestic inflation reading further diminished the chance of an increase in interest rates anytime soon, stifling banks’ ability to raise their margins.

“There are negative leads from global markets, and we have also heard from a number of companies today - their quarterly reports and their annual general meetings,” said Michael McCarthy, chief market strategist at CMC Markets.

“Their outlook statements and results have had a slightly negative impact (on the market).”

Miners steepened the slide on the index, with BHP Billiton falling to its lowest in nearly a week on soft iron ore prices.

Fortescue Metals Group Ltd, the world’s fourth-largest producer of iron ore, logged its biggest single-day percentage fall in nearly six weeks with a 3.8 percent drop, after reporting only a slight rise in iron ore shipments.

Qantas Airways plunged 7.2 percent to a three-week low early on after saying it expected slower revenue growth, but the shares later trimmed losses to trade down 1.9 percent.